Va. Firm Grows Fast, But Katrina Aid Lags

Debra James and her son Eric sit in their gutted home in New Orleans. They sleep in a FEMA trailer in the back yard while they wait on a Road Home grant. ICF International has issued 40,000 grants but aims for 90,000 this year.
(By Mario Tama -- Getty Images)

Louisiana Gov. Kathleen Babineaux Blanco went to New Orleans last August to oversee the opening of the city's first housing-assistance center aimed at people whose homes were destroyed or damaged by Hurricane Katrina. "This is not just a real estate transaction, but an emotional transaction as well," Blanco said, adding: "Full-speed ahead!"

Blanco, a Democrat, was counting on a Northern Virginia government contractor to manage Louisiana's "Road Home" program and get money to homeowners so they could rebuild. And ICF International of Fairfax was eager to prove itself, viewing the roughly $750 million contract as a source of new business, a foundation for future growth.

In the year since, the company's stock price has skyrocketed, its revenue has doubled and its workforce has grown. But the program, the nation's largest housing assistance effort, has had a bumpier experience. Although 40,000 people have received payments, ICF has been the subject of steady criticism from government officials and homeowners for failing to award grants fast enough. Blanco said through a spokeswoman this week that she was "still quite dissatisfied with ICF's performance."

"There are big positives, and there are some challenges which we have to deal with," Sudhakar Kesavan, the company's chief executive, said in an interview. "It's a learning process. There will be certain political aspects to any program of this size as the firm grows. Here, the humanitarian aspect is extremely important."

ICF had never run such a program before Hurricane Katrina and then Hurricane Rita set down two years ago on the Gulf Coast and ravaged several hundred thousand homes in Louisiana. The need to hand out help collided with bureaucratic and political hang-ups, and ICF often found itself in the middle.

The company started in 1969 as the Inner City Fund, whose goal was to provide capital to urban businesses. Over time, it built up some expertise in government housing programs, primarily as a consultant. After the hurricanes, ICF was hired to help Louisiana devise a plan for spending a projected $7.9 billion in federal housing aid. It soon saw an opportunity to expand its role, positioning itself not just to consult but to run government programs.

"We could take the capabilities built here and leverage them in response to additional disasters," said John Wasson, ICF's chief operations officer.

Simply winning the contract sparked the first controversy. The Louisiana Republican delegation, no fan of Blanco, alleged "obvious ethical conflicts" because the company had helped work on the spending plan. The executive director of the state Board of Ethics wrote that he had "grave concerns," but his board cleared ICF for the work.

The company launched a pilot effort in summer 2006, seeking to close the gap between what it would cost to repair or replace a damaged home, up to $150,000, minus whatever a homeowner received from insurance or other sources. The average grant has been $73,000.

Lawmakers, homeowners and others quickly complained that the program was not doling out money fast enough. And there were arguments over the calculations used to appraise the pre-storm value of homes.

Still, in October ICF received a second contract to expand the pilot program to 11 cities. The expectation was that it would take 2 1/2 years for an estimated 100,000 people to get their money. That was not fast enough for some. "We were getting criticized within one month," said ICF senior vice president Douglas Beck.

As 2007 neared, barely 300 people had received housing grants. ICF said that's all the contract called for at that time.